By Levi Crews
Levi Crews
It’s an all-too-familiar headline: “In the midst of drought, California farmers used more water for almonds.” Almonds are one of the most water-intensive crops we grow—it takes more than a gallon of water to produce a single nut. And yet California, one of the driest agricultural regions in the country, now produces about 80% of the world’s almonds, much of it for export. This boom has coincided with a stretch of deepening droughts, land subsidence, and groundwater overdraft across the Central Valley. That raises a natural question: Is international trade draining California’s water?
In a new paper “Agriculture, Trade, and Global Water Use” with Tamma Carleton (UC Berkeley) and Ishan Nath (Harvard Kennedy School), Professor Levi Crews studies this question on a global scale. He and his coauthors combine recent advances in hydrological measurement from NASA’s Gravity Recovery and Climate Experiment (GRACE) with agricultural and economic data to inform a dynamic, high-resolution model of agricultural production, trade, and water use. The goal: to understand how trade in agricultural commodities affects long-run water availability and agricultural productivity the world over.
The answer, it turns out, suggests that California and its almonds are the exception, not the rule.
Globally, water-intensive agriculture overwhelmingly takes place in water-abundant regions. This is true even though most farmers around the world use water as an open-access resource, with no market prices or tradable rights (another way that California and its Sustainable Groundwater Management Act are the exception). The data show that farms in the wettest parts of the world use nearly nine times more water per acre than those in the driest. That pattern is both surprising and encouraging: it suggests that nature—through annual endowments of rainfall and the physical costs of reaching deep water tables—does much of the work of rationing water use, even without formal markets.
Against this backdrop, trade tends to reduce water stress globally. When the authors simulate a world without trade in agricultural commodities, global water consumption rises by 60% and water tables fall sharply—especially in dry, food-importing countries. Food prices also skyrocket, increasing fourteen-fold in some places. Why? Trade allows countries to specialize according to their natural resource endowments, effectively exporting crops from wet to dry places and preserving global water stocks. Without it, everyone needs to grow their own almonds.
But California’s Central Valley is one of the rare exceptions: in the simulation without trade, the rate of groundwater depletion there slows. Without access to global markets, local farmers scale back on water-intensive crops, easing pressure on aquifers. But these reversals are confined to a small number of already overdrawn exporters; for most of the world, trade is what prevents depletion in the first place.
Additional simulations add more nuance. The Uruguay Round of WTO negotiations—the largest agricultural liberalization to date—shifted production toward several dry, water-scarce countries and modestly increased global depletion. Even when trade improves efficiency overall, then, specific reforms can push in the wrong direction.
California’s Central Valley stands out as a rare case where agricultural trade, combined with high water-intensity, has put mounting pressure on local resources. But zooming out to the global picture reveals a more optimistic story: trade, when well-aligned with natural resource endowments, is a big part of the solution.
The paper can be found here: https://www.levicrews.com/files/p-wateruse_paper.pdf
Research by UCLA Professor Martha Bailey featured in CBS News
/in News /by Jerry LiuResearch on the first federally-funded family-planning programs by UCLA Professor Martha Bailey was featured in CBS News. The CBS News article can be found here.
UCLA Professor Martha Bailey Interviewed on the Financial Times Podcast
/in News /by Jerry LiuSarah O’Connor from the Financial Times interviewed Martha Bailey for the Economics Show podcast. They discuss Professor Bailey’s recent paper: The Economics of Childbearing: Trends, Progress, and Challenges.
The transcript of the episode can be found here.
Professor Bailey’s paper can be found here.
Alumnus Spotlight: Terry Kramer ’82 – Supporting UCLA
/in News /by Jerry LiuUCLA Economics Alumnus, Terry Kramer ’82, and member of the Economics Department Board of Visitors is the subject of the most recent “Alumnus Spotlight.” Terry was also the guest of honor and delivered the Commencement Address to our Economics class of 2025.
Read the full story here.
UCLA Professor Till von Wachter and the California Policy Lab awarded a $5.95M grant from Conrad N Hilton Foundation
/in News /by Jerry LiuThe Conrad N Hilton Foundation has awarded a $5.95 million grant to Professor Till von Wachter and the California Policy Lab (CPL). The foundation, a long-term supporter of the Lab, approved this landmark, three-year grant in recognition of CPL’s leadership and data-driven approach on strategies to prevent homelessness. The grant announcement can be found here: https://www.hiltonfoundation.org/news/advancing-homelessness-prevention-through-research-and-policy-a-conversation-with-janey-rountree-of-the-california-policy-lab/.
UCLA Professor Till von Wachter and the California Policy Lab win UCLA’s Public Impact Research Award
/in News /by Jerry LiuUCLA Professor Till von Wachter and the California Policy Lab, a nonpartisan research institute at the University of California, receive UCLA’s Public Impact Research Award. The award recognizes faculty whose research produces meaningful public impact, especially when paired with sustained efforts to share new insights with the broader public. The award is presented annually by UCLA’s Office of Research and Creative Activities. The award announcement can be found here: https://capolicylab.org/news/california-policy-lab-wins-2025-public-impact-research-award-for-transformative-research/ .
The National Institute of Health Awards UCLA Professor Martha Bailey an R01 Grant
/in News /by Jerry LiuHow a Historic Corporate Tax Cut Reshaped the U.S. Economy
/in Research Spotlight /by Jerry LiuBy Patrick Kennedy
In a sweeping one-time test of corporate tax policy, UCLA economist Patrick Kennedy (with collaborators at the Joint Committee on Taxation) analyzes the effects of the 2017 Tax Cuts and Jobs Act (TCJA), the largest federal corporate income tax cut in U.S. history. Leveraging a natural experiment due to idiosyncrasies in U.S. tax law, the study compares outcomes of corporations that received larger versus smaller tax cuts, providing clean before‑and‑after comparisons across otherwise similar firms.
Sharper incentives, faster growth
The researchers identify a substantial tax cut of 5–6% for C‑corporations relative to S‑corporations, fueled by the TCJA’s reduction in corporate tax liability. This translated into a 4.4 percentage‑point uptick in their capital stock, pointing to meaningful firm expansion. Pre‑tax profits rose by about 2.2 percentage points, signaling that the value of the additional goods and services provided by these firms exceeded the costs required to produce them.
Shareholder payouts soar
Shareholders reaped especially large benefits. After‑tax profits of C‑corps rose by 9.2%, while payouts to shareholders through dividends and buybacks jumped by 18.2%. These results confirm that much of the immediate tax windfall was distributed directly to firms’ shareholders, rather than plowed back into new equity issuance or borrowing.
More jobs and higher pay at the top
Workers also shared in the gains, but unevenly. Employment at C-corps increased by 1.3%, reallocating workers from other jobs into the corporate sector. Average earnings at C‑corps increased modestly, by 0.6%. The median worker saw no detectable change in earnings, but pay at the 95th percentile rose 1.1%, and executive compensation climbed 2.3%. These results suggest that corporate tax cuts disproportionately boosted high-income earners within firms, with little short-run effect on typical workers’ wages.
Bringing it all together: Growth and Fairness
Aggregating across the economy, the study estimates that 73% of the total income gains from the tax cuts accrued to the top 10% of households. Moreover, income gains were nearly twice as large in high-income urban centers like New York and San Francisco than in the median American county. The evidence thus highlights a central trade-off: corporate tax cuts reduce distortions, increase firm activity, and raise economic growth across the American economy, but also deliver disproportionately large benefits to high earners. For policymakers, the findings underscore that while tax cuts can spur measurable economic growth, their consequences are uneven for American households across the country.
The study, “Corporate Tax Cuts, Firm Growth, and Workers’ Earnings,” is available here.
Professor Till von Wachter’s Research on Unemployment Impact of Los Angeles Wildfires Featured by UCLA News
/in News /by Jerry LiuA new UCLA report led by Professor Till reveals that more than 11,000 workers filed for unemployment assistance following the Los Angeles wildfires, highlighting the broader economic consequences of the disaster.
Here is the direct link to the article:
More than 11,000 workers filed for unemployment assistance programs because of Los Angeles wildfires, new report shows | UCLA
UCLA Professor Rosa Matzkin Named to Editorial Board of Prestigious National Academy of Sciences Publication
/in News /by Jerry LiuIs International Trade Draining Our Water?
/in Research Spotlight /by Jerry LiuBy Levi Crews
Levi Crews
It’s an all-too-familiar headline: “In the midst of drought, California farmers used more water for almonds.” Almonds are one of the most water-intensive crops we grow—it takes more than a gallon of water to produce a single nut. And yet California, one of the driest agricultural regions in the country, now produces about 80% of the world’s almonds, much of it for export. This boom has coincided with a stretch of deepening droughts, land subsidence, and groundwater overdraft across the Central Valley. That raises a natural question: Is international trade draining California’s water?
In a new paper “Agriculture, Trade, and Global Water Use” with Tamma Carleton (UC Berkeley) and Ishan Nath (Harvard Kennedy School), Professor Levi Crews studies this question on a global scale. He and his coauthors combine recent advances in hydrological measurement from NASA’s Gravity Recovery and Climate Experiment (GRACE) with agricultural and economic data to inform a dynamic, high-resolution model of agricultural production, trade, and water use. The goal: to understand how trade in agricultural commodities affects long-run water availability and agricultural productivity the world over.
The answer, it turns out, suggests that California and its almonds are the exception, not the rule.
Globally, water-intensive agriculture overwhelmingly takes place in water-abundant regions. This is true even though most farmers around the world use water as an open-access resource, with no market prices or tradable rights (another way that California and its Sustainable Groundwater Management Act are the exception). The data show that farms in the wettest parts of the world use nearly nine times more water per acre than those in the driest. That pattern is both surprising and encouraging: it suggests that nature—through annual endowments of rainfall and the physical costs of reaching deep water tables—does much of the work of rationing water use, even without formal markets.
Against this backdrop, trade tends to reduce water stress globally. When the authors simulate a world without trade in agricultural commodities, global water consumption rises by 60% and water tables fall sharply—especially in dry, food-importing countries. Food prices also skyrocket, increasing fourteen-fold in some places. Why? Trade allows countries to specialize according to their natural resource endowments, effectively exporting crops from wet to dry places and preserving global water stocks. Without it, everyone needs to grow their own almonds.
But California’s Central Valley is one of the rare exceptions: in the simulation without trade, the rate of groundwater depletion there slows. Without access to global markets, local farmers scale back on water-intensive crops, easing pressure on aquifers. But these reversals are confined to a small number of already overdrawn exporters; for most of the world, trade is what prevents depletion in the first place.
Additional simulations add more nuance. The Uruguay Round of WTO negotiations—the largest agricultural liberalization to date—shifted production toward several dry, water-scarce countries and modestly increased global depletion. Even when trade improves efficiency overall, then, specific reforms can push in the wrong direction.
California’s Central Valley stands out as a rare case where agricultural trade, combined with high water-intensity, has put mounting pressure on local resources. But zooming out to the global picture reveals a more optimistic story: trade, when well-aligned with natural resource endowments, is a big part of the solution.
The paper can be found here: https://www.levicrews.com/files/p-wateruse_paper.pdf